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Welcome to the anti-stimulus

sepjob.jpg

The good news: The private sector gained 64,000 jobs in September. The bad news? The public sector lost 159,000. And they weren't all census jobs, either. Local governments fired 76,000 workers. In other words, this is the first jobs report in recent months that isn't driven by census layoffs. If there were no census jobs at all, the report would still be negative.

In other words, welcome to the anti-stimulus.

The government is now impeding an economic recovery. But it's not for the reasons you often hear. It's not because of debt or because of taxes. Nor has it scared the private sector into timidity. It's because, at the state and local level, it's firing people. There are more than 14 million Americans looking for work right now -- to say nothing of the 9.5 million who have been forced into part-time jobs when they want, and need, full-time work -- and the government just added 159,000 more to the pool. Consider this: If we only counted private-sector jobs, we'd have had positive jobs reports for the last nine months. As it is, public-sector losses have wiped out private-sector gains for the past four months.

privateandpublicjobs0910.jpg

It doesn't need to be like this. The government can't make the private sector invest. They can't demand that Wal-Mart start hiring. They can offer incentives, and tax breaks, and encouragement, but that's it. The same cannot be said when it comes to public sector jobs. The government can, if it's willing to run deficits, keep those workers employed. But Senate Republicans, alongside some conservative Democrats, have decided to make the government pro-cyclical: Rather than fighting the downturn in the business cycle, the government is now accelerating it.

And don't ignore the effect this has on private businesses. They're not going to hire new workers or invest in more capacity if jobs aren't coming back, because without jobs, there's no demand. But because the federal government has decided against backing up state and local governments, the bleeding continues, and that scares businesses away from investing in recovery. We create the stimulus that helped the economy survive 2008 and 2009, and we've created the anti-stimulus that's keeping it from recovering in 2010.

By Ezra Klein  | October 8, 2010; 8:34 AM ET
Categories:  Economy  
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Comments

Again, this crisis flows from Obama's original sin, the stimulus: he traded away state and local aid for Susan Collins' tax-cut-for-the-affluent vote. Epic fail.

Posted by: scarlota | October 8, 2010 9:44 AM | Report abuse

Wait I'm confused.

"Local governments fired 76,000 workers"

And this is somehow the FEDERAL senate republicans that are completely to blame? What you are saying is that I, living in Chicago, have a duty as an American to support the local government in New York, California, Florida, Idaho, etc.

What kind of crazy land do you live in? Where in the Constitution, or federal code, or ANYWHERE does it say that there is a responsibility of the federal government to backstop local government?

Posted by: Bailers | October 8, 2010 9:46 AM | Report abuse

Ezra, where do you think the money comes from to pay for these public sector jobs? The government? Where does the government get its money to make payroll? Local governments are firing workers because they don't have the payroll or the positions aren't, and probably never were, necessary. This is a correction, let the size of local, state and federal government dwindle. Let working people keep their tax dollars, not prop up some unproductive beauracracy.

Posted by: babylonodyssey | October 8, 2010 9:48 AM | Report abuse

Aren't some of these jobs one that's were created with the original stimulus, and now "expiring"?

Also, just this year, all federal employees received a salary increase of 2%. If they had just skipped that 2% raise, just this year, couldn't most of those jobs have been preserved?

Also, I refer you to CATO's analysis of federal compensation vs. private sector compensation:

http://www.cato.org/pubs/tbb/tbb-0605-35.pdf

Of course, CATO has federal employees making out like bandits (and, indeed, benefits plus annual raises tend to make working for the government more profitable than working for the private sector, even if CATO's numbers are massaged to make the difference appear a little more huge than it may actually be). The reality is, add annual pay increases (something I can promise you often goes the other way in the private sector, or at least did for me) plus generous benefits packages, and there's money that could be conserved, other than just increasing taxes or running deficits, to preserve public positions. Essentially, government agencies and programs are letting people go in order to support the annual wage increases and generous benefits packages for those that remain.

There is another way.

Posted by: Kevin_Willis | October 8, 2010 9:51 AM | Report abuse

There's a statement above that "The government can't make the private sector invest. They can't demand that Wal-Mart stop hiring. They can offer incentives, and tax breaks, and encouragement, but that's it."

As of yesterday, such statements are false. The federal government can, at the moment, command any individual or business to spend money in any manner the federal government rationalizes. At any moment, Wal-Mart can be told to stop hiring: at any moment, investors can be told to invest.

We are already commanded to buy health insurance -- why not simply command Wal-Mart to hire certain people?

Posted by: rmgregory | October 8, 2010 9:54 AM | Report abuse

scarlota: I agree that Collins watered down the stimulus. But which other vote in the Senate was available to pass a larger, more effective stimulus? Who *should* have the Democrats looked to?

Posted by: vvf2 | October 8, 2010 10:06 AM | Report abuse

They're just following orders. The leader of the Republican Tea Party (Rush Limbaugh) announced the strategy soon after Obama took office: "I want him to fail!", and by logical extension, he wanted for all of America to fail. His right-wing minions dutifully set about doing everything in their power to ensure that America would fail, by obstructing every bit of legislation or regulation which would have improved the situation in any way. They were and are willing to destroy America and the lives of most Americans in order to regain control of Congress and to keep our tax dollars flowing into the pockets of their billionaire masters. So we have arrived at the demise of a once-great nation, sacrificed to sustain the gluttonous excess of the Billionaires' Club and the politicians & judges they own. There will be no change; there is no hope. America is gone forever.

Posted by: mgloraine | October 8, 2010 10:09 AM | Report abuse

Here is New Jersey Governor Chris Christie 'splaining exactly how greedy public employee teacher unions, by refusing to make small concessions, have caused the loss of jobs.

http://blog.heritage.org/2010/09/09/video-gov-chris-christie-schools-new-jersey-teachers-unions/

Do I want my money shipped off to save New Jersey teacher jobs so New Jersey teachers don't have to contribute 1.5% of their salary to their health benefits and take a 1 year pay freeze? Not on your life.

Posted by: bgmma50 | October 8, 2010 10:10 AM | Report abuse

That's because we built up a massive excess of government jobs in the 2000s.

A crisis is a bad thing to waste. Axe em all.

Posted by: krazen1211 | October 8, 2010 10:13 AM | Report abuse

That's because we built up a massive excess of government jobs in the 2000s.

A crisis is a bad thing to waste. Axe em all.

Posted by: krazen1211 | October 8, 2010 10:13 AM | Report abuse

"Again, this crisis flows from Obama's original sin, the stimulus: he traded away state and local aid for Susan Collins' tax-cut-for-the-affluent vote. Epic fail."

That's because local and state labor unions are subsidiaries of the Democratic Party.

Posted by: krazen1211 | October 8, 2010 10:20 AM | Report abuse

"Again, this crisis flows from Obama's original sin, the stimulus: he traded away state and local aid for Susan Collins' tax-cut-for-the-affluent vote. Epic fail."

That's because local and state labor unions are subsidiaries of the Democratic Party.

Posted by: krazen1211 | October 8, 2010 10:20 AM | Report abuse

@mgloraine: "They were and are willing to destroy America and the lives of most Americans in order to regain control of Congress and to keep our tax dollars flowing into the pockets of their billionaire masters"

Wow! I was going to vote for the Democrats, but now that I realize the Republicans are automatons working for their evil Billionaire overlords, I'm going to vote for Republicans. I wouldn't want to evil billionaires to get mad at me and crush me like a bug because I voted for the Dems!

@krazen1211: "Axe 'em all!"

You don't have to axe 'em all. Freeze wage increases for a year. For stepped employees, delay step implementation for a year (steps being tiered compensation, always going up, for the given public employee, for 5 or 8 or 15 years, to reward seniority) across the board.

Again, even at the local level, most of these people are being laid off to preserve those who are still employed pay raise, if not from this year, then from last year.

Posted by: Kevin_Willis | October 8, 2010 10:22 AM | Report abuse

"The government can, if it's willing to run deficits, keep those workers employed."

Borrow money from China and hire government employees? Is that your best idea to improve the economy? Do you have any other ideas?

Posted by: win_harrington | October 8, 2010 10:45 AM | Report abuse

By the way, I note something interesting. The boost in the growth rate due to ARRA is supposed to fall from ~1.7% to 0.0% from Q2 to Q3 to -0.6% in Q4. These are rough numbers since I'm guesstimating See the link (found this via a Krugman post):

http://www.econbrowser.com/archives/2009/12/levels_versus_g.html

GDP only grew by 1.7% in Q2, implying that all of the growth that quarter was due to ARRA alone. The stimulus attributes about 2.2% of the past year's 3.0% GDP growth to ARRA, for a baseline trend about about 0.8%.

Why aren't basically all economists expecting a recession when a -0.8% or so drag for the next four quarters, when the baseline trend has only been +0.8%? Many economists expect ~2.5% growth, implying 3.3% baseline growth (outside of ARRA). Why the sudden surge once stimulus fades away?

And why did the private sector continue to add jobs at a modest clip in Q3 now that stimulus is being withdrawn (let alone the state/local level and census drag)? Jobs started being lost coincidentally with the onset of recession (2008Q1 negative GDP, job losses started appearing here).

Posted by: justin84 | October 8, 2010 11:07 AM | Report abuse

It looks like 77,000 of the "lost' 159,000 public sector jobs were census workers.

Posted by: bgmma50 | October 8, 2010 11:10 AM | Report abuse

What we need is George Bush to come back. For Liberals he created the prescription benefit for the conservatives he got involved in two wars and privatized the military and bankrupted the USA. I have an idea vote the GOP back in and it's happy days again. Their answers are the same as when George was in office!

Posted by: Ralph_Indianapolis | October 8, 2010 11:15 AM | Report abuse

The pro-cyclical original sin here wasn't the Obama stimulus. The original sin was that state and local governments spent too much, cut taxes too much and/or incurred too many obligations in the good times for their tax base to support through an entire business cycle. Now they need to rebalance back to sustainable levels by increasing taxes or cutting spending. That this delevereging is hurting an already poor economy is unfortunate, but necessary to get back to sustainable levels of government.

Posted by: whyyesbrain | October 8, 2010 11:15 AM | Report abuse

Ezra, you are mistaken about what the government can and can't do. It can indeed "make" the private sector hire and expand: by contracting for goods and services. This is not a small part of what the government does. Every department could spend more for recapitalization and infrastructure, among other things, to boost private sector employment today. Investment spending (replace old computers, repair buildings, restock ammunition, etcetera) ahead of schedule would increase the deficit today but reduce future spending and future deficits.

Posted by: pjro | October 8, 2010 11:19 AM | Report abuse

What don't conservatives understand about economics 101, the problem is a lack of consumer demand because of unemployment and business contraction. The more unemployment (whether private or public), the less government spending on contractors and government employees lessens demand in the overall economy thus cutting government spending prolongs the recovery! There is no amount of conservative talking points which can change this basic rule of economics.

Posted by: bravestar360 | October 8, 2010 11:33 AM | Report abuse

Bravestar,

You poorly state Keynesian theory. And things are not as cut and dried as your comment suggests. The primary problem is not consumer demand but private investment. Using deficit spending to shore up consumer demand has real costs either in future tax rates, inflation and real economic growth.

Steve

Posted by: FatTriplet3 | October 8, 2010 11:46 AM | Report abuse

In response to all of the "local governments spent to much, got to bloated, etc." comments, I think you are abdicating you personal responsibility and apparently have little connection to your local government.

My husband works in a construction-related profession. He was in the private sector and in 2008-2009 he was working crazy hours just to get some revenue in the door while he had his insurance cut and retirement savings diverted to paying the phone and electricity bills. He was lucky to land a public-sector job as that job evaporated. The entity had a very nice rainy-day fund and was confident they could weather the recession pretty much in-tact. Fast forward 18 mo. later, their tax revenue dried up so fast, they depleted the rainy day fund, the ARRA funds kept things humming for a bit longer, but those projects are more or less completed, and so they just cut 10% across the board -- police, fire, public works, etc.

The catch, of course, is that the citizens in that community WANT a certain level of service. Just because they don't want to ante up additional revenue, they still want the police to patrol their streets at a certain frequency and they complain when it doesn't happen -- there is no adjustment of expectations.

My point is, if you think that your local public sector has gotten too big, you need to be in there, running for office and seriously looking at what you want to do without -- there are not any shovel-leaners left. I think, once you really start looking, there isn't much that enough people can agree they want to do without but it is going to happen anyway and there are going to be more water main breaks, more crowded classrooms, more pot holes, and longer waits for permit review, police and fire response, etc.

Posted by: kcar1 | October 8, 2010 11:56 AM | Report abuse

Surprise! Property tax revenues go down when housing prices decline (on a lagged basis).

Actually, it's not really a surprise - just as local gov't employment slowing or falling when property tax revenue declines is also not a surprise. A CETA-style jobs program would have buffered the loss in jobs and services provided by state and local gov'ts. The overall job numbers would be much better at this point.

Posted by: tuber | October 8, 2010 11:57 AM | Report abuse

Ezra:

There's a multiplier n where for every public employee terminated n private employees get or get to keep their jobs.

I would argue that the average n is positive and greater than one. If so, every public employee laid off generates or saves real jobs.

Interesting field for research. I assume n is a function of the kind of job the public employee does. For a public employee who's main task is writing and enforcing regulations, n might be as high as 20 or 30. More public employee layoffs of regulation-writing and enforcing will generate more real jobs!


Posted by: JohnRichardHines | October 8, 2010 12:14 PM | Report abuse

"Again, this crisis flows from Obama's original sin, the stimulus: he traded away state and local aid for Susan Collins' tax-cut-for-the-affluent vote. Epic fail."

That's because local and state labor unions are subsidiaries of the Democratic Party.

Posted by: krazen1211
-------------
Actually you conveniently left out the fact that Bush & the Republicans have increased the size of the government in response to the 9/11 with the excuse that it was needed. (even Laffer justified it with his twisted partisan way).

To put your statement in perspective, Businesses and CEOs are subsidiary of the Republican Party.
==========


Bravestar,

You poorly state Keynesian theory. And things are not as cut and dried as your comment suggests. The primary problem is not consumer demand but private investment. Using deficit spending to shore up consumer demand has real costs either in future tax rates, inflation and real economic growth.

Steve

Posted by: FatTriplet3
----------------
Au contraire, many businesses and CEOs have stated that they are stocking up cash as reserve or buy back shares as well as borrowing money at ultra low interest(MS borrowed several millions at .0875%) as a hedge simply there are no consumer demands to justify hiring soon. In essence telling us that we have to borrow more just to get the economy forward(which we have been doing for 30 years until the bill comes due).

For the investment, the last 30 years of deregulation banks have pushed the equity to the breaking point that caused the market to decline precipitously and then get back door bailout for the mistake they made in the bets. The share price is half of what it is in 2007-2008. Even Rogoff has stated this in "This Time It is Different."

It is both political parties that been using deficit spending (just look at the tax plan both have put out just to extend Bush tax breaks) to justify why they are right when they are wrong (CBO says so) Clinton had everything in place to move it forward and yet the GOP reversed it just to give more tax break to the ultra rich and spending that put us where we are.

Posted by: beeker25 | October 8, 2010 12:22 PM | Report abuse

Y'know what's really scary about this? These state governments are the ones in charge of implementing the Health Insurance Exchanges. You know, the ones that are going to be the whole driving force of health reform?

Of course, very few states have anything like the needed base of experienced health policy experts willing to serve as regulators anyway. And their tax base won't let them hire new folks. And they can't run a deficit. And if they DO lift their hiring freezes, there's no way some health policy person's going to get in ahead of more established public employee interests like teachers or police.

So the quality of these exchanges should be...interesting.

Posted by: NS12345 | October 8, 2010 12:24 PM | Report abuse

Balanced budget amendments have required pro-cyclical policies from the states. Rather than countering the business cycle to smooth inflation and palliate recessions, balancing a budget in the short run means spending when the economy is good and tax receipts are up, and retrenchment when people are unemployed, paying less in taxes and more reliant on government assistance.

The result is a government that accelerates inflation and worsens recessions, the exact situation that Keysenians try to avoid. There are many reasons that government shouldn't be run like a business, and counter-stimulus is one of them.

Balanced budgets are important in the long run, but trying to balance the government budget during a recession means higher unemployment expenses and lower tax receipts. To compensate, the government has to layoff workers and push the economy further down the recession well just as it is most needed to ease the pain.

Posted by: AxelDC | October 8, 2010 12:26 PM | Report abuse

Folks - the mistake you are making is that you expecting a clear, logical argument from Ezra "Pretzel Logic" Klein. It ain't gonna happen.

Posted by: hz9604 | October 8, 2010 12:39 PM | Report abuse

@hz9604: "Folks - the mistake you are making is that you expecting a clear, logical argument from Ezra "Pretzel Logic" Klein. It ain't gonna happen."

Nothing wrong with Pretzel Logic.
http://en.wikipedia.org/wiki/Pretzel_Logic


@AxelDC: "Balanced budget amendments have required pro-cyclical policies from the states."

Many states created rainy day funds but given the severity of the great recession and the unexpectedly weak policy response from the feds, the rainy day funds have been drained.

Posted by: tuber | October 8, 2010 1:08 PM | Report abuse

Why don't the states just print some more money like the federal government?

Posted by: markd301 | October 8, 2010 1:09 PM | Report abuse

"Actually you conveniently left out the fact that Bush & the Republicans have increased the size of the government in response to the 9/11 with the excuse that it was needed. (even Laffer justified it with his twisted partisan way).

To put your statement in perspective, Businesses and CEOs are subsidiary of the Republican Party."

Bush increased the size of the FEDERAL government.


That has little to do with the massive amount of state workers New Jersey hired in the 2000s.

Posted by: krazen1211 | October 8, 2010 1:28 PM | Report abuse

What if the States and localities have too many employees for the amount of work they're getting done? It's hard enough to let go of people now, how hard do you think it's going to be when the coffers are full?

Posted by: cooreilly | October 8, 2010 1:47 PM | Report abuse

it's funny seeing some of the comments in this post. partisanship and biased sources aside...here is some good points:


for the record, the stimulus ended up supporting state governments.meaning state governments didn't maintain their original spending pace, they just moved projects they needed to do to the stimulus funds. now that the support is fading the state governments will make cuts to be "fiscally conservative". Paul Krugman, Roubini and Delong have all covered this and have been calling this pretty much on point the last 3 years. Krugman's blog is sometimes scary accurate in it's predictions.

You have to spend to get the economy moving and restore confidence and restart private investment which would result in new jobs and gdp growing faster which makes the deficit not as serious as gop makes it out to be. problem is getting the country to think like really intelligent macro economists. it's easier to use kitchen table talk to confuse the public into inaction.

sure hope the government cuts spending wholesale... the public will then see and appreciate why you need a strong safety net and why we really needed to deficit spend among other things our way out of this mess.

Cutting spending, reducing the size of federal, local and state governments will only deepen the slump. or as Dick Cheney said "it's Herbert Hoover time"

Posted by: fausto412 | October 8, 2010 1:57 PM | Report abuse

@JohnRichardHines 'N'? I'm willing to bet you haven't got a shred of evidence to backup your absurd claim, which is illogical on its face, and says simply: "Firing working people in the public sector leads to increased employment in the private sector." How's that true, even in the best of times?

Posted by: brykin | October 8, 2010 2:22 PM | Report abuse

These two quotes sum up right wing opinion perfectly, one ruthless, the other a little more genteel:

"That's because we built up a massive excess of government jobs in the 2000s.

A crisis is a bad thing to waste. Axe em all.

Posted by: krazen1211 | October 8, 2010 10:13 AM"

"Ezra:

There's a multiplier n where for every public employee terminated n private employees get or get to keep their jobs.

I would argue that the average n is positive and greater than one. If so, every public employee laid off generates or saves real jobs.

Interesting field for research. I assume n is a function of the kind of job the public employee does. For a public employee who's main task is writing and enforcing regulations, n might be as high as 20 or 30. More public employee layoffs of regulation-writing and enforcing will generate more real jobs!


Posted by: JohnRichardHines | October 8, 2010 12:14 PM"

By this logic, conservatives ought to be cheering the bad jobs numbers, because they show more and more people being axed from the public sector. Hooray!

Nowhere is there a recognition that people with public-sector jobs are doing real work. There is an inability to get their minds around the very simple idea that there is a lot of vital work that needs to be done, and public, taxpayer-funded entities have to do it, because nobody else will. These are not people soaking up a paycheck in some enormous racket; put down the Ayn Rand and spend a day in a water treatment plant or a county hospital or a public defenders' office.

We have moved from right-wingers protesting government action that is redistributive, to assuming that the entire function of government is parasitic. No other idea need be entertained.

Posted by: StPaulite | October 8, 2010 2:32 PM | Report abuse

Ezra, are you advising the state house here in California? It certainly seems likely. We are now 100 days past the dead line without a budget. The latest news out of Sacramento boasts that the new budget, if passed will have more than a billion in new spending with no new taxes. It doesn't seem to phase our state political leaders that we are billions in debt with reported unemployment above 10% while the real number is probably closer to 18 or 20%. So your solution is to borrow and spend billions more on non-productive government jobs so those of us who own and run businesses will feel better? Where do they teach this stuff?

Posted by: gbhmb | October 8, 2010 2:44 PM | Report abuse

I'm concerned that even a number crunching liberal like Ezra Klein calls the private sector adding 64,000 jobs "good news." Dude, we need double that number just to keep the unemployment rate constant because of new entrants into the labor market.

Posted by: Booyah5000 | October 8, 2010 3:17 PM | Report abuse

The simple reality is the local and state governments engaged in the same economic binge that the private sector did. They hired hundreds of thousands of new positions over the last 15-20 years, many of which were unnecessary, and used fat tax coffers that were filled thanks to relatively robust economic growth to pay for these jobs.

The flaw in this system was that the private sector was going through boom cycles during many of these years, and increased government spending actually fueled the booms even more by raising salaries higher, pushing unemployment lower, and infusing more demand into an already bustling market. If we're going to follow the logic that governments should increase spending during economically depressed years to take up the slack, then governments also should decrease spending during boom years to add slack back into the economy and prevent a boom from getting out of hand. However, this is never what happens. Governments are as greedy as anyone, and when they are faced with piles of cash, their instinct is to spend rather than to save. Taxpayers don't like to see heaps of unspent money during half the years, but this is precisely how a responsible government's balance sheet should look--for every year that there is a deficit, there should be a corresponding surplus in other years.

This lesson is almost as old as recorded history. It's what Joseph did to stock up for the famine in Egypt, after all. Somehow, though, we lack government leadership nearly so wise. The result is the government spending ramps up during boom years, fueling the boom even higher, and then the subsequent bust leaves governments completely strapped and unable to cope. Governments end up laying off workers as much as the private sector does, and the result is an even bigger economic mess. The solution right now isn't for local and state governments to stop laying off people. They need to do so, and delaying will only sustain the economic mess for longer. The solution is to cut the unnecessary fat from government now, and then start implementing some smart policies so that we don't make the same mistake again.

Of course, the federal government engaged in the same hiring binge during boom years, too, and the federal government has yet to start laying people off. Obama is consistently running the biggest deficits in history, with the largest government in American history to match. It's not sustainable either, and once the dollar goes bust from government overspending, we're going to see the mother of all anti-stimuli as the federal government suddenly finds itself unable to finance a third or more of the jobs that it currently has.

Posted by: blert | October 8, 2010 3:21 PM | Report abuse

"By this logic, conservatives ought to be cheering the bad jobs numbers, because they show more and more people being axed from the public sector. Hooray!

Nowhere is there a recognition that people with public-sector jobs are doing real work. There is an inability to get their minds around the very simple idea that there is a lot of vital work that needs to be done, and public, taxpayer-funded entities have to do it, because nobody else will. These are not people soaking up a paycheck in some enormous racket; put down the Ayn Rand and spend a day in a water treatment plant or a county hospital or a public defenders' office.

We have moved from right-wingers protesting government action that is redistributive, to assuming that the entire function of government is parasitic. No other idea need be entertained."


Talk about a strawman.

Student teacher ratios were about 10% higher today than 15 years ago. They're more than 20% higher (or lower I suppose) than they were 25 years ago.

And of course, pensions. Hardly necessary to perform *vital* work (work that apparently takes 20% more employees than it did while Reagan was President).

It is necessary, though, to preserve the democrats > union > democrats cash flow cycle.

Posted by: krazen1211 | October 8, 2010 3:36 PM | Report abuse

It's easy to say "cut the unnecessary fat" but nobody agrees on which budget lines are unnecessary. There is no consensus on that, at all, and there are good reasons -- and constituencies -- for every dollar spent.

"It's what Joseph did to stock up for the famine in Egypt, after all. Somehow, though, we lack government leadership nearly so wise...."

Are you talking about state-level GOP pols? The story of the late-90s surplus years was conservatives rushing to cut taxes and issue everyone surplus checks. A few Democrats here and there talked about "rainy days". Generally you couldn't hear of a surplus without it being treated like a moral horror.

I suppose what we're saying is ideologically different takes on the same problem. Everyone loves government expenditure, but it's very easy to attack (and prevent) the raising of government revenue.

Posted by: StPaulite | October 8, 2010 3:38 PM | Report abuse

Here's the real facts:


http://nces.ed.gov/programs/digest/d08/tables/dt08_064.asp


Let it be known that Bill Clinton and George W. Bush went to school when there were about 27 students per teacher.

Barack Obama went to school when there were about 22 students per teacher.

Bill Clinton was president when there were about 17 students per teacher.

Today that number is about 15 students per teacher.

Oh, but of course we need to give those teachers $26 billion or else 300k layoffs will make the system crumble.

Yeah, right.

Posted by: krazen1211 | October 8, 2010 3:49 PM | Report abuse

State and local governments made commitments based on the assumption that boom year tax revenue streams would last forever. Government payrolls are not subject to the cost cutting pressures that have faced the private sector. Only a crisis like the current one will enforce some kind of discipline on government employment practices. It is only going to get worse as state and local governments have to face up to the problems with their finances and the unwillingness of their citizens to pay more taxes.

Posted by: dnjake | October 8, 2010 4:27 PM | Report abuse

: Boss, our local unions are so big their forcing local governemnt to cut their jobs. I suggest the federal government open up the China Credit Card and print some more money to keep them hired.

: Borrow from China and leave our kids with the bills? I hadn't thought of that.....

Posted by: dnara | October 8, 2010 4:50 PM | Report abuse

Mr JournOlist, why should your readers believe anything you write?

Posted by: VastRightWingConspirator | October 8, 2010 4:52 PM | Report abuse

The unemployment rate has now topped 9.5 percent for 14 straight months, the longest stretch since the 1930s.

How's that hope and change thing working for ya!

Posted by: geo82170 | October 8, 2010 4:59 PM | Report abuse

"Of course, the federal government engaged in the same hiring binge during boom years, too, and the federal government has yet to start laying people off. Obama is consistently running the biggest deficits in history, with the largest government in American history to match. It's not sustainable either, and once the dollar goes bust from government overspending, we're going to see the mother of all anti-stimuli as the federal government suddenly finds itself unable to finance a third or more of the jobs that it currently has."
---------------------

Except, in both a real and relative sense, federal government employment is smaller than at any time in the last 30 years. There are 2.7M federal employees ... the last time there were as few was during the Reagan administration, whose low water mark was 2.8M. We now have about 50M more people in the country since then. So gov't is smaller, the TARP was smaller, taxes are lower, but everyone STILL complains about the evil gov't.

Posted by: tgaylord1999 | October 8, 2010 5:05 PM | Report abuse

Oh, but of course we need to give those teachers $26 billion or else 300k layoffs will make the system crumble.

Yeah, right.

Posted by: krazen1211
__________________________________________

Apparently when (if?) Krazen went to school the ratio was 100 to one. Educate kids, why would we want to do something so unnecessary when we can buy all the technology we want from China, India, Korea etc. Why have those businesses here providing jobs? Oh yeah, some of them might be unionized, and no good can come from a union job. GOP folows the "Socialism for the rich and capitalism for the poor" motto.

Posted by: grclarkdc1 | October 8, 2010 5:34 PM | Report abuse

"Apparently when (if?) Krazen went to school the ratio was 100 to one. Educate kids, why would we want to do something so unnecessary when we can buy all the technology we want from China, India, Korea etc. Why have those businesses here providing jobs? Oh yeah, some of them might be unionized, and no good can come from a union job. GOP folows the "Socialism for the rich and capitalism for the poor" motto."


What is it with liberals and ridiculous exaggerations? The data suggests nothing close to what you are implying.

Posted by: krazen1211 | October 8, 2010 6:14 PM | Report abuse

When bubbles occur there is, by definition, a very significant misallocation of capital and labor toward sectors that sooner or later will collapse, sectors which must be pruned back for general economic health so a dynamic economy can use those resources to adopt technological and managerial innovation and become more productive, increasing the nation's standard of living.

In the late 90's the Tech Bubble grew in part because of Y2K requirements and the stunning growth of the internet. The bubble generated massive capital gains tax revenues giving the impression that government had a base of larger resources than it eventually could count on. The surplus was bound to be illusory but public sector jobs burgeoned. Similarly, the housing bubble, fueled by cheap credit, extraction of illusory home equity and a tidal wave of foreign investment made possible by current account trade deficit. Those too fueled an unsustainable base of government employees.

We have had bubbles, panics and recessions for hundreds of years. We recover when we let the private sector reallocate resources more efficiently. Massive borrowing, to support for a few years public sector jobs primarily, has a very significant cost to future production.

More or less, that understanding has shocked much of the voting public who certainly don't have faith in those with political agendas to wisely spend other people's money. Nor do they believe that governments even remotely approximate efficient operation. The truth is many public sector jobs should be and have to be cut in order to recover, just as many bankers, mortgage brokers, construction workers, real estate agents lost their jobs.

Of course we know that process is painful for so many, our family too has been significantly affected. But for the patient to survive he must sometimes take nasty medicine.

Posted by: twodogmas1 | October 8, 2010 6:15 PM | Report abuse

Several points should be noted about the number of public sector jobs:

What should be of concern is not the total number of federal jobs by various current measures but rather the total compensation of all federal, state and local workers. That must include the massive increase in contract work now performed by the private sector for government which in many cases was once handled in-house 3 decades ago.

A significant portion of the growth of government expenditures has been in this category; the problem is not just in entitlements although surely those must be reformed as well.

Another way to put it is when the growth of government spending, especially recently, outstrips the growth of the economy as it has for decades a reckoning is overdue.

Posted by: twodogmas1 | October 8, 2010 7:36 PM | Report abuse

This story was interesting when Meredith Whitney forecast it 6 months ago. Congratulations on hijacking someone else's work, WaPo!

Posted by: dsk36 | October 8, 2010 7:37 PM | Report abuse

This story would have been interesting if it wasn't a cut-n-paste from every interview Meredith Whitney has given for the last 6 months. Congratulations on finding "control+P" WaPo!

Posted by: dsk36 | October 8, 2010 7:40 PM | Report abuse

Ezra,

Thanks for pointing out that the $30 Billion bill Obama and the democrats passed last summer to save all these government jobs was another Obama/Democrat lie.

Who got the $30 Billion, Obama, Reid or Pelosi?

Posted by: robtr | October 8, 2010 7:46 PM | Report abuse

Partisan politics destroyed recovery and is continuing to do its dirty work--plain and simple. Too simple to ignore.

The stimulus--had it been large enough--would have brought about close to full recovery by now.

Instead, self-interested career politicians and billionaires, have put us at the early stages of the Third Great Depression.

Paul Krugman, who sounded the alarm on the impending crisis twice weekly for years before it occurred, analyzed the new Depression months ago. Conservative economists poo-hooed it for as long as they could without looking like morons, but have since surrendered. A depression it is.

Meanwhile, the corporations, some of them among those we bailed out, have made record profits, lining the pockets of the political campaign-funding shareholders, but have not rehired, nor created new jobs. In fact, their stingy exploitation of their workers has led to resignations.

Americans don't like bullies.

In the meantime, the Appeasement Obama Administration (peace in our time-- a piece for you and a piece for me) fires government workers who will now be unable to buy that which the bailed out sell.

Pieces in our time. Congrats Dems and Reps.
RIP, America.

Posted by: FarnazMansouri2 | October 8, 2010 8:25 PM | Report abuse

"The good news: The private sector gained 64,000 jobs in September. The bad news? The public sector lost 159,000."
---------
But the BLS doesn't distinguish between part-time and full-time jobs in their headline job numbers. A job is considered a job. But a part-time job does not have the same economic value as a full-time job. Considering both part/full-time jobs the same may make sense from a political viewpoint, as it makes the numbers look better, but it doesn't paint a true picture of the economy at any point in time.

=========
About 2.5 million persons were marginally attached to the labor force
in September, up from 2.2 million a year earlier. (The data are not sea-
sonally adjusted.) These individuals were not in the labor force, wanted
and were available for work, and had looked for a job sometime in the
prior 12 months. They were not counted as unemployed because they had
not searched for work in the 4 weeks preceding the survey.

http://www.bls.gov/news.release/empsit.nr0.htm
=========

The private job gains would look a lot worse if part-time workers were broken out. How many of the 64,000 jobs gained this report were part-time jobs?

Posted by: JackJo | October 8, 2010 11:53 PM | Report abuse

Darn it! We need an edit function here. I inserted the wrong quote, so now have to resubmit the whole thing while leaving the incorrect one up!
==========

"The good news: The private sector gained 64,000 jobs in September. The bad news? The public sector lost 159,000."
---------
But the BLS doesn't distinguish between part-time and full-time jobs in their headline job numbers. A job is considered a job. But a part-time job does not have the same economic value as a full-time job. Considering both part/full-time jobs the same may make sense from a political viewpoint, as it makes the numbers look better, but it doesn't paint a true picture of the economy at any point in time.

=========
The number of persons employed part time for economic reasons (sometimes
referred to as involuntary part-time workers) rose by 612,000 over the
month to 9.5 million. Over the past 2 months, the number of such workers
has increased by 943,000. These individuals were working part time be-
cause their hours had been cut back or because they were unable to find
a full-time job.

http://www.bls.gov/news.release/empsit.nr0.htm
==========

The private job gains would look a lot worse if part-time workers were broken out. How many of the 64,000 jobs gained this report were part-time jobs?

Posted by: JackJo | October 8, 2010 11:59 PM | Report abuse

"The private job gains would look a lot worse if part-time workers were broken out. How many of the 64,000 jobs gained this report were part-time jobs?"

I'm not sure if they split private full time vs. public full time, but the bls does have a series on full time employment.

You can find it here:

http://www.bls.gov/webapps/legacy/cpsatab9.htm

Adjusted for seasonal factors, 1,000,000 full time jobs have been lost since May, and 106,000 were lost during the past month.

Posted by: justin84 | October 9, 2010 12:22 AM | Report abuse

Ezra,

Would you like the government to employ every citizen of the united states? We would have zero percent unemployment.....hooray.

We can have a utopian dream.

Oh wait...there is a thing called a budget, and debt, and creditors.

Ezra....Econ 101. Only thing stimulus creates is borrowing and consumption, not saving and producing.

Finally, the more govt workers fired is a good thing. They extorted their way to outrageous salaries and pensions and now are biting the bullet.

Posted by: jdgreger@yahoo.com | October 9, 2010 12:33 PM | Report abuse

Keynesian garbage is based on really having no idea...If the govt hires everyone, it's Greece. Raise taxes to pay overpaid bureaucrats? I think not. Printing money? The psychotic solution.
Hey lets actually kill all porky govt jobs and benefits. Fire public union workers. Public unions are RESPONSIBLE for all the government job losses. "It should be intuitively obvious that printing money to retain overpaid government workers at the expense of everyone else is blatantly foolish."

Ezra, stick to food. You are just plain wrong, totally, and way over your head. You, Krugman, Bernanke should all be given lengthy time-outs if not forced exile.

Posted by: Ubster | October 9, 2010 1:43 PM | Report abuse

Forget borrowing more money to throw it down a government rat hole.

Get rid of the Davis Bacon Act and then we can get some public works jobs done on time and within budget and at less cost to the taxpayer and alot more jobs.

State and local governments should privatize and work that they can, again to get it done and less costly to taxpayers and actually more jobs.

The government unions have a strangle hold on tax payers with their over priced wages and benefits compared to the private sector. Eliminate the unions and there will be far more taxpayer $'s to get what needs to be done and far more jobs.

Posted by: swmapes | October 10, 2010 1:02 PM | Report abuse

159,000 tax feeders now must fend for themselves? (After they feed at the unemployment insurance trough as long as they can of course.) That's great news, but only a start. When a million of them have to find honest, productive work, then maybe things will start to turn around.

Posted by: jdadson | October 10, 2010 9:40 PM | Report abuse

Donny, I mean Ezra, you are out of your element here.

Posted by: jdadson | October 10, 2010 9:52 PM | Report abuse

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